A comparison guide between hiring and buying mining machinery
To make any mining operation successful requires planning and logistics. If you are involved with a project, you have no doubt considered whether to buy or hire your mining machinery.
In this article, we are going to discuss the pros and cons in the hope it will provide the right solution for your circumstances.
Hire vs Buying Machinery Equipment
Buying machinery equipment is a huge capital investment. There is also the additional costs of maintaining and repairing the equipment (and contracting a professional to do so). In a time where the future of many mines are uncertain, this may not seem like the most feasible idea as you might not be able to get a return of investment.
For some operations, it might be more economically viable to hire. Yes, you do not own the machinery outright, which can have its limitations, but you do have access to the latest, high quality mining equipment.
Service and support
When you hire from a quality provider, you will get a high level of service and support. The team will be able to recommend the right machinery for your requirements. Additionally, you will not need to employ someone to maintain and repair the equipment – one of their specialists will do it for you.
To show how hiring is actually budget friendly, let us use the house market as an example. When you rent, you are giving another party money instead of investing in your home (mortgage). Some people see that as dead money. While owning your own property is beneficial, it is sizable venture that not only requires the initial purchase, but further costs associated with fees and maintenance. If you are unable to keep up with the repayments, you may even risk losing the home.
Like renting, hiring mining equipment keeps your expenditure low (as well as risk of financial loss) because you do not need extra capital to properly manage and maintain it. It allows you to keep with an allocated budget because you know exactly what your costs will be from month to month.
You only hire as long as you need to. If you own the machinery and the project ends, you will have to go to the trouble of selling it – and you will not get what you want for it because it will have depreciated in value.
Try before you buy
One of the benefits of hiring any sort of equipment is it gives you time to trial it before a potential purchase. This will help you ascertain whether it is worth buying outright.
The most apparent negative to hiring is you do not own the machinery. This can quite a disadvantage if you rent for an extensive period, as it may end up costing you more than buying the machinery outright.
The other con is machine availability. During the height of the boom, the wait list for hiring equipment was exceedingly long, which pushed project schedules out. However, that has all changed. The current demand for hire equipment is much less, meaning the waiting time has decreased.
Mining has experienced a down turn in certain parts of the sector, but that does not mean the party is over. In fact, according to mining production forecasts, it means just the opposite. Between now and 2019/20, production volume and commodity prices are predicted to grow [source]. What that means is the lead up time for machinery purchase and hire will increase. Therefore, if you need mining equipment, it is best to beat the forthcoming demand and hire as soon as possible.